At last, everybody's agreed where to put their money: the S&P.
Sealy Posturepedic, that is.
Stuffing what market-ravaged bucks are left in your mattress doesn't sound half as silly as it did just a few weeks ago. Who knows? Maybe it will comfort investor insomniacs to wake up and actually feel their net worth intact for once.
A savvy financial friend who just returned from a news-deprived week camping with Boy Scouts asked me: How could the market tank so deeply, so quickly?
A neighbor who often strolls by my house is turning 65. This week his face was visibly pained by a market that's forcing him to reconsider when, how _ and maybe if _ to retire.
Tuesday's stock markets offered little hope. The Standard & Poor's 500 Index fell 2.7 percent, below 800 for the first time since May 1, 1997. The Nasdaq dropped 4.2 percent, and the Dow slid another 1.1 percent, remaining well below 8,000.
Economic records are toppling all over. Enron could claim it was the nation's biggest corporate bankruptcy for all of seven months. Now it's WorldCom's turn at the top.
If that pace of change doesn't faze you, NBC already is making a movie of Martha Stewart's life that will include the ongoing investigation of her possible insider stock trading. I am not making this up, and we still have three trading days to go this week.
Let's look at the hard realities:
Investor confidence: It's still dropping like a rock, despite the financial cheerleading of our political leaders. Optimism plunged to an all-time low this month amid concern over corporate accounting scandals, according to the monthly "index of investor optimism," a joint effort of UBS (the parent of PaineWebber) and the Gallup Organization. Now at 46, the overall index fell a remarkable 26 points from 72 in June. The index had a baseline of 124 when it was established only six years ago.
Reverse wealth effect: You'll be hearing this phrase a lot in the coming weeks and months. Opened your 401(k) statement lately? The stock market boom of the late 1990s spurred Americans to spend more as they saw their investment portfolios rising. So now the worry is that falling stock prices will trigger a "reverse wealth effect" and scare consumers to spend less.
An urge to save: Thanks to the boom in stock values in the late 1990s, our personal savings rate dipped to record lows. No more. William C. Dudley, chief economist for Goldman Sachs and Co., says the savings rate, already up to 3 percent, is likely to nearly double in the coming year or two. Want to save $50 a week? Take your own lunch to work. Want to pay your mortgage off faster and save? Look at refinancing with a 15-year mortgage, now near all-time low interest rates.
Beware a real estate bubble: Why are homes appreciating so much? Many people are pulling money out of stocks and using it to trade up in real estate, both as an investment and as a way to enjoy their money more. But take care. If stocks stay depressed, the flow of money into housing will start to dry up. And if interest rates rise _ they will eventually _ some real estate markets could be clobbered.
Banks look safer: Suddenly those FDIC-backed certificates of deposit with their puny interest rates don't look quite so bad. Estimated deposits of $4.4-trillion in U.S. banks as of July 10 _ including checking accounts, savings accounts and CDs _ were up $37.6-billion from the week ended June 19 and up $59.6-billion from the end of May, according to the Federal Reserve.
Withdrawals from U.S. equity funds totaled $13.8-billion in June. That's the third largest monthly outflow from the stock funds ever, as well as the first outflow since investors pulled $30-billion out of equity funds last September.
Double-dip recession? Bad news about the stock market has clashed with the seemingly good news about a U.S. economy reviving from a brief recession. But now the depth of the market decline is sparking new talk from noted economists about another recession looming in 2003 or so. "The market decline certainly increases the odds of dipping back into recession because it makes things more fragile," says Standard & Poor's chief economist David Wyss.
Stephen Roach, chief strategist at Morgan Stanley, says in a report to clients: "The sharp recent decline in the stock market increases the odds of a double dip in the U.S. economy."
Lots of 52-week lows: Too many companies big and small suffer stock prices at or near their annual lows. Among those bumping along near 52-week lows that are key to Tampa Bay workers and investors: Verizon, Walt Disney, Progress Energy, TECO Energy, Raymond James, Tech Data, Digital Lightwave, Kforce, Catalina Marketing and Uniroyal Technology. The list goes on.
Back to the workforce: If stock markets remain depressed, more people 55 years and older will try to keep working longer than expected to make up for lost savings. Other seniors will try to return to the workforce _ a difficult task for many _ to supplement battered retirement funds. "People may have to delay retirement one, two, even five years," says AARP labor economist Clare Hushbeck, especially if their retirement portfolios were too heavy in stocks.
The good news? Work is more flexible than it used to be, with opportunities for project work, part-time consulting and temp positions _ if folks have the right skills. The number of people working at ages 65 to 69 has been drifting higher for a decade and now stands at 25 percent.
Forget all that sentimental nonsense about whether you'll still need me or feed me when I'm 64. The real question is: Will you still employ me?
_ Robert Trigaux can be reached at trigauxsptimes.com or (727) 893-8405.